2024 (6) TMI 401 - AT - Customs

Tribunal Upholds Enhanced Valuation of Imported Goods Due to Missing Chartered Engineer Certificate; Appeal Dismissed.

M/s. Fonty Supply Chain Solutions Pvt. Ltd. Versus Commissioner of Customs, Chennai

The Tribunal dismissed the appellant's appeal, upholding the enhancement of the transaction value from GBP 7200 to GBP 14,000 under Rule 9 of CVR, 2007. ... Valuation of imported goods - Used Reach Truck with 2 Additional Batteries and 1 Charger BT RRE 77 No. 737271 year 2005 Mast TXHI 11,500MM and some other new Reach Truck Parts - rejection of transaction value - enhancemnat of value value based on Chartered Engineer Certificate - no evidence to doubt the value declared by the appellant - HELD THAT:- The goods imported are used and old goods. It is impossible to assess the value of such old goods without being supported by a load port Chartered Engineer Certificate. As per Clause (c) of Board Circular referred above, old and used goods can be subject to examination of an approved Chartered Engineer in case the goods imported is not accompanied by load port Chartered Engineer Certificate. For these reasons, there are no error in rejecting the transaction value. The value has been enhanced on the basis of the Chartered Engineer Certificate and the CE has considered depreciation also. Taking note of the facts and also after perusal of the order passed by the Original Authority, there are no grounds to interfere with the enhancement of the transaction value declared by the appellant. The same has been enhanced on the basis of the certificate issued by the Chartered Engineer which is also proper. The decisions relied by the Ld. Counsel for appellant do not apply to the facts as the appellant has imported the goods without load port Chartered Engineering Certificate. The Tribunal in the case of SWARNA HEATING & CONTROL CO. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) CHENNAI [2018 (4) TMI 1253 - CESTAT CHENNAI] in similar set of facts rejected the appeal filed by the importer. The impugned order does not call of interference - Appeal dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether transaction value declared for import of used/second-hand goods can be rejected in absence of a load-port Chartered Engineer Certificate. 2. Whether a post-import examination and certificate by an approved Chartered Engineer can be relied upon to modify/enhance declared transaction value under the Customs Valuation Rules. 3. The role and applicability of Section 14 of the Customs Act and the Board Circular parameters (para 2(i)/(ii) and clause (c)) in assessing declared transaction value for used goods. 4. Whether precedents cited by the importer preclude rejection of declared value in the absence of additional evidence of undisclosed consideration. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Rejection of transaction value in absence of load-port Chartered Engineer Certificate Legal framework: Section 14 (transaction value) of the Customs Act governs acceptance of declared transaction value; Customs Valuation Rules (including Rule 9 of CVR, 2007 as applied) and Board Circular No.4/2008 set out parameters and procedures for dealing with imports of used goods and circumstances where transaction value may be questioned. Precedent treatment: The appellant relied on Tribunal decisions holding that transaction value cannot be rejected without sufficient evidence of undisclosed consideration. The Tribunal distinguished those precedents on facts where load-port certificates or equivalent material were absent. Interpretation and reasoning: The Court observed that used/old goods present intrinsic valuation difficulties and that the Board Circular contemplates examination by an approved Chartered Engineer where a load-port Chartered Engineer Certificate is not produced. In the absence of such certificate at import, it is reasonable and permitted to reject the declared transaction value and seek examination; consequently, rejection on that basis is not arbitrary or presumptive. Ratio vs. Obiter: Ratio - where used/second-hand goods are imported without a load-port Chartered Engineer Certificate, authorities may reject declared transaction value and seek/accept assessment by an approved Chartered Engineer. Obiter - general comments distinguishing unrelated precedents on their facts. Conclusion: Rejection of the declared transaction value in the absence of a load-port Chartered Engineer Certificate was justified. Issue 2 - Reliance on post-import Chartered Engineer certificate to enhance value Legal framework: Board Circular provisions permitting examination of used goods by approved Chartered Engineers and Rule 9 of CVR, 2007 (as applied) permit valuation adjustments based on such expert examination; valuation must account for condition and depreciation of used goods. Precedent treatment: The Department relied upon an earlier Tribunal decision with similar facts upholding enhancement based on a Chartered Engineer's certificate. The appellant's authorities were found inapplicable because they involved different evidentiary settings. Interpretation and reasoning: The Certificate of the approved Chartered Engineer addressed condition and depreciation and provided an evidentiary basis to adjust declared value. The Tribunal found that such expert certification constituted competent material to enhance the declared CIF value to a figure reflecting the assessed market value, and that the adjudicating authority properly applied the statutory and circular framework. Ratio vs. Obiter: Ratio - an approved Chartered Engineer's post-import examination and certificate, where permitted by the applicable circular/rules, is valid evidence to enhance declared transaction value for used goods. Obiter - observations on the impracticality of valuing used goods without expert assessment. Conclusion: Enhancement of declared value on the basis of the Chartered Engineer's certificate was proper and legally sustainable. Issue 3 - Application of Section 14 and Board Circular parameters (para 2(i)/(ii) and clause (c)) Legal framework: Section 14 provides the statutory criteria for accepting transaction value; Board Circular No.4/2008 sets out procedural guidance: para 2(i) indicates retention of transaction value when all statutory parameters are satisfied; para 2(ii) and clause (c) envisage examination and assessment where parameters are not satisfied or where load-port certification is absent for used goods. Precedent treatment: The appellant argued that para 2(i) should have been applied and value retained; the Tribunal found that para 2(ii)/clause (c) legitimately applied where the import lacked a load-port certificate and the goods were used. Interpretation and reasoning: The Tribunal interpreted the circular as distinguishing between imports that meet Section 14 parameters outright and imports that do not (including used goods without appropriate certification). Where the latter obtains, the circular authorises examination by approved experts and consequent reassessment. Thus, the departmental reliance on para 2(ii)/clause (c) was consistent with the circular and Section 14 framework. Ratio vs. Obiter: Ratio - where Section 14 parameters are not demonstrably satisfied for used goods and no load-port certificate exists, the departmental invocation of para 2(ii)/clause (c) to obtain expert valuation is appropriate. Obiter - none beyond contextual interpretation. Conclusion: The application of para 2(ii)/clause (c) (and consequent departure from para 2(i)) was appropriate in the factual matrix of used goods imported without load-port Chartered Engineer certification. Issue 4 - Effect of authorities relied upon by importer Legal framework: Principles establishing that transaction value should not be rejected absent evidence of undisclosed consideration remain valid, but their operation depends on factual matrix and available evidence. Precedent treatment: The Tribunal reviewed cited decisions and found them distinguishable because those cases did not involve imports of used goods lacking load-port Chartered Engineer Certificates or involved different evidentiary records. Interpretation and reasoning: The Tribunal held that precedents standing for the proposition that mere absence of a load-port certificate is insufficient to reject transaction value were inapplicable where the import of used goods created an intrinsic need for expert valuation and the importer failed to produce the requisite certificate. Thus, the earlier decisions do not prevent enhancement where the statutory/circular route for expert assessment is followed. Ratio vs. Obiter: Ratio - precedents protecting transaction value do not bar rejection/enhancement where the specific exceptions and procedures in the circular and valuation rules apply and the importer fails to provide prescribed certification. Obiter - distinguishing remarks as to factual differences with earlier cases. Conclusion: The authorities cited by the importer did not mandate retention of the declared value on these facts and were properly distinguished. Final Disposition The Tribunal found no error in rejection of the declared transaction value or in enhancing value based on the approved Chartered Engineer certificate; the enhancement was consistent with statutory provisions and circular guidance. The impugned valuation adjustment was upheld and the appeal dismissed as devoid of merit.